Tag: Economics

An economy has a low level of unemployment. The government increases its expenditure.

Which method of financing the additional expenditure is most likely to cause inflation?

Select ONE answer:

1. an increase in borrowing from the Central Bank
2. an increase in income taxes
3. an increase in sales of state assets to the non-bank public
4. an issue of bonds to the non-bank public

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 1

1. Correct
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Why might a rise in domestic interest rates improve a country’s balance of payments on current account?

Select ONE answer:

1. Domestic firms will become more competitive.
2. It will result in a fall in the exchange rate.
3. It will result in a reduction in spending.
4. There will be an inflow of short-term capital

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

In the long run, productive potential in an economy grows at an average rate of 3% per year.

In a particular year actual growth is zero because of a fall in domestic consumption.

What is likely to occur?

Select ONE answer:

1. an increase in the rate of inflation
2. an increase in the trade deficit
3. an increase in unemployment
4. a reduction in the government budget deficit

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

What would cause an increase in the transactions demand for money?

Select ONE answer:

1. an increase in the rate of interest
2. an increase in nominal national income
3. a fall in the price of bonds
4. an increase in unemployment

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The accelerator principle refers to a relationship between investment and …..?

Select ONE answer:

1. the level of GDP.
2. changes in GDP.
3. the level of interest rates.
4. changes in interest rates.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.